Taxes for Local Benefits – IRS Pub. 17

05-23-2017, 06:43 PM

My question is whether one can deduct from their federal taxes the portion of their utility bill used for improving the system. My local sewer provider’s operation of the system accounts for just 33% of billed services with the remainder for maintenance and extending services for new development through bonds to include interest.

Reading the excerpt from IRS Publication 17 within “Taxes for Local Benefits” under the Real Estate Related Items You Can’t deduct, the section speaks that local taxes are deductible for maintenance, repair, interest…you must be able to show the amount of that part to claim the deduction.

I have approached my local sewer provider and asked that they display the remaining portion of the bill so that the above condition would be provided. Although not a tax, it is a charge that I have no recourse but to pay and ask if it may be deducted from federal taxes when delineated.

Researching LII, I found two subsections referencing taxes for local benefits: 1.164-4 and 1016(a)(1), but feel these areas do not address this particular deduction.

Is there a subsection of the IRS law (CFR) that points to this possible deduction?